Wednesday's Commodities Roundup

Dow Jones News Service

Published 9:00 pm, Tuesday, July 23, 2002

Via The Associated Press

NEW YORK (Dow Jones News) _ Crude oil and most products futures rallied Wednesday, led by soaring gasoline, during a volatile trading session reacting to conflicting U.S. inventory data and choppy equity markets.

On the New York Mercantile Exchange, nearby August crude futures gained 56 cents to close at $26.87 a barrel.

August Nymex gasoline futures rose 2.81 cents to close at 82.33 cents a gallon. August heating oil rose 1.75 cent to close at 67.60 cents a gallon.

On London's International Petroleum Exchange, nearby September Brent futures rose 29 cents to close at $25.33 a barrel.

The American Petroleum Institute showed a crude draw of 6 million barrels in the week ending July 19, compared with expectations for a draw of around 1 million barrels.

API gasoline stocks were down 1.2 million barrels and distillates were shown down 2.3 million barrels.

There was, however, a fair amount of trader skepticism over these numbers, and both Brent and gas and oil slowly edged down in the morning on the anticipation that stock data by the U.S. Department of Energy released at 1 p.m. EDT would be less bullish and provoke further selling.

They were and they did. The release of the DOEs, coupled with the falling Dow industrials at the opening bell, sent IPE prices plunging in the early afternoon.

Energy Department data showed a smaller, but still bullish, crude draw than the APIs, at 3.7 million barrels, with gasoline stocks reported down 600,000 barrels and distillates were down 200,000 barrels.

"The inventory reports have been clearly bullish," said Mike Fitzpatrick, analyst at Fimat USA Inc. "The muted response in the oil markets certainly may have something to do with spillover from the equity markets."

Falling equity markets were a key focus, with traders fearing a significant drop in global demand due to a serious economic slowdown.

Brokers said what the funds do next is crucial to the direction of oil prices, which have dropped sharply Monday and Tuesday amid fears that producing countries would open their taps.

Funds are liquidating positions and accumulating cash, but they could soon turn bearish and start short selling.

In other commodities Wednesday:

_Speculation that poor crop conditions will push domestic corn production below the U.S. Department of Agriculture's latest estimate helped the September contract reach a 49-month high at the Chicago Board of Trade Wednesday.

After hitting a session high of $2.50, which was last seen in June of 1998, the September contract settled at $2.4925, just below the $2.4950 high seen in May of 2000. Meanwhile, the December contract, which closed at $2.5925, set a new one-year high.

_Futures fell to new contract lows at the Coffee, Sugar & Cocoa Exchange as the market shrugged off concerns over possible damaging weather in Brazil early next week. "The market just ignored the reports that frost could occur," said Ann Prendergast, soft commodities analyst with brokerage firm Refco Inc. The September future fell 1 cent to 47.80 cents a pound.

_Frozen concentrated orange juice futures climbed to a seven-month high on the New York Cotton Exchange, with the prospect that private forecasts due next month will estimate Florida's 2002-03 orange crop below the recent harvest. The September future rose 0.85 cent to $1.0050 a pound.